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Ethanol Beneath Their Wings
Lovers may croon that the object of their affection is the “wind beneath their wings.” For farmers, it’s been ethanol.
According to the Kansas Farm Management Association (KFMA), the average net farm income for its members last year was $115,035, more than double the 2006 figure of $46,593 and $56,982 in 2005. Ten years ago, the average net farm income was $59,352, according to KFMA.
Livestock producers, hit with high grain and hay prices in addition to high fuel costs, didn’t fare quite as well. Operations classified as cash crop-backgrounding farms showed an average net farm income of $74,803. Cow-calf operations came in at $34,948.
In contrast, net farm income for dryland crop farms averaged $120,594; producers with irrigated crops averaged $280,585.
And it appears that grain prices will continue to be fueled by ethanol, according to the American Farm Bureau Federation. That’s good news for farmers battling high input costs, bad news for cattlemen battling the same high inputs plus high feed costs.
Commenting on USDA’s “World Agricultural Supply and Demand Estimates” report for May, Farm Bureau senior economist Terry Francl said, “With the exception of wheat, supply and demand balances particularly for corn and beans will remain tight and prices high. Moreover, despite the high crop prices of the past year or so, it is not clear that demand rationing has truly begun.”
Consequently, he says, it’s unclear just how high prices will go. “Perhaps $7/bu. for corn and $15/bu. for beans before the rationing process truly sets in. I sense we’re getting close to that point, but we aren’t there quite yet.”
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